UK Government Expands NSIA Notifiable Acquisition Schedules to Include AI and Water, March 2026

The UK Government published the outcome of its consultation on the National Security and Investment Act 2021 (NSIA) Notifiable Acquisition (Specification of Qualifying Entities) Regulations 2021 on 12 March 2026, in a document designated CP 1529. The response confirms that the Government will amend Schedule 1 of the 2021 Regulations to add two new qualifying sectors: Artificial Intelligence and Water. The amended Regulations will require that certain acquisitions of qualifying entities operating in AI and water be formally notified to the Investment Security Unit (ISU) before completion. Failure to notify a notifiable acquisition renders the transaction void and exposes the acquirer to civil and criminal penalties under section 32 of the NSIA 2021.

The NSIA 2021 is the controlling statute. Under section 6, the Secretary of State may call in acquisitions that may give rise to national security risks. Under section 14, parties to a notifiable acquisition must submit a mandatory notification before completion, and the Secretary of State has 30 working days to clear, impose conditions, or block the transaction. CP 1529 defines the scope of the new AI sector by reference to the development or deployment of artificial intelligence systems or components, including machine learning models, natural language processing systems, and computer vision systems, when the qualifying entity meets the relevant activity threshold set out in the amended Regulations. The Water sector definition covers entities providing water treatment, supply, distribution, or management services to UK consumers or infrastructure.

Any person acquiring a 25% or greater interest, or acquiring material influence, over a qualifying AI or water entity must file a mandatory notification with the ISU before completing the transaction. This applies to both domestic and foreign acquirers. Investors currently holding stakes in UK AI companies — including Web3 infrastructure providers, blockchain analytics firms, and tokenisation platforms that incorporate AI components — must assess whether their existing or planned acquisitions fall within the new AI sector definition. Portfolio companies deploying machine learning in financial services, trading, compliance, or identity verification may qualify under the new schedule. Acquirers who complete a notifiable transaction without filing are subject to the NSIA 2021's void transaction and penalty regime.

The consultation response does not set a definitive commencement date for the amending Regulations. CP 1529 states the Government will bring forward amending legislation when parliamentary time allows. Acquirers of UK AI entities should treat the mandatory notification requirement as an imminent compliance obligation and implement pre-transaction screening procedures. The exemption thresholds under the 2021 Regulations — acquisitions where the target has a UK turnover of less than £1 million and fewer than 50 employees — continue to apply and may exclude early-stage AI start-ups from the mandatory notification obligation.

Source: UK Government, "National Security and Investment Act (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021 — Consultation Response," CP 1529, published 12 March 2026. Available at: https://www.gov.uk/government/consultations/consultation-on-the-nsi-act-notifiable-acquisition-regulations/outcome/national-security-and-investment-act-notifiable-acquisition-specification-of-qualifying-entities-regulations-2021-consultation-response. Confirmed as current as of 19 March 2026.

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